Put those containers away

[SD60MAC9500]

GE appliances doesn't want to put those containers away. In fact they want more.

[blue streak 1]

Here on I-85 south of Newnan Ga ( 25 miles south of ATL airport ) the state is having to repair many potholes in the concrete pavement.   Procedure is close a lane  starting at about 7PM, break out all the pothole, tamp the hole, and fill with fast drying concrete.  Reopen at about 7 AM.  The right lane mostly for trucks is the lane with the most potholes.  A welcome change driving over the repairs..

There is one bridge on the I-85 now being fixed.  The bridge has major under pinning problems that has been worked on almost every night for at least 3 weeks.

[tree68]

ttrraaffiicc

It looks like rail is entering another slump it won't recover from.

Traffic is slowly returning to pre-panicdemic levels through Deshler.  The fans there keep a running count...

[ttrraaffiicc]

JimmyChonga

We american taxpayers cannot continue to maitain the highways for trucking. The last numbers I recall peg $0.18/mile per truck in maintanence fees! And that's just for a measley 80,000 gross vehicle. Furthermore, if you think a lack of rail sidings is a problem; what about builing more highways $$$ Electric trucks, automation... all cool stuff but the efficiencies just aren't there.

The thing about road subsidies is that despite all of the talk that we can't continue to keep doing things the way we do, we have done things this way for over 60 years. People have always said there isn't money for it, but for 60 years the money has come from somewhere.

Fred W. Frailey

Today, if rail costs to move a container 2,000 miles are indexed at 100, highway costs are 131. (A 31 percent cost advantage hides a lot of late deliveries.) A three-unit platoon with drivers in all cabs would bring the truck index down to 121, a three-unit platoon with a single driver would drop the index to 96, and a driverless truck would be indexed at 79.

The solution to the subsidy problem is simple. As trucking costs decrease substantially through the adoption of new technologies, trucking will be able to pay the true cost per mile of road usage while still remaining at cost parity or below rail. Essentially, shippers can recieve truck service and transit times at rail costs and the tax payer will not be on the hook for it.

Also of note: https://trn.trains.com/news/news-wire/2020/07/09-carload-rail-traffic-slower-to-rebound-than-trucks

It looks like rail is entering another slump it won't recover from.

[JimmyChonga]

We american taxpayers cannot continue to maitain the highways for trucking. The last numbers I recall peg $0.18/mile per truck in maintanence fees! And that's just for a measley 80,000 gross vehicle. Furthermore, if you think a lack of rail sidings is a problem; what about builing more highways $$$

Electric trucks, automation... all cool stuff but the efficiencies just aren't there.

[BaltACD]

csxns

 

tree68

I don't think you realize how much (and what type of) traffic actually travels on the rails. 

I don't think any of us can visualize ALL the domestic traffic that is moving with all the modes of transportation - Roads, railroads, watercraft, pipelines and air.

More traffic than any single mode can ever be built out to handle individually.

[csxns]

tree68

I don't think you realize how much (and what type of) traffic actually travels on the rails.

[tree68]

ttrraaffiicc

It is going to be difficult justifying the use of rail when this is an option.

Sometimes I don't think you realize how much (and what type of) traffic actually travels on the rails.

Spend a day on the Deshler webcams (or any other - I just know Deshler better), and keep the CSX symbol wiki up, too, so you can see where those 50+ trains are going.

[Overmod]

ttrraaffiicc

The article says "Lu envisions Level 4 automation giving rise to a new form of intermodal operations, where trucks piloted by drivers continue to handle short hauls while autonomous trucks emerge as an option for longer-distance freight movements."  It is going to be difficult justifying the use of rail when this is an option.

The problem here is that you read just far enough to confirm your prejudices and then came whipping over here to pre-emptively gloat.  A couple of sentences later is this:

Although Level 4 trucking is not scalable to every nook and store front, it is well-suited to repeating the mundane, longhaul routes on interstate highways where driver recruiting and retention pose significant challenges for fleets, he said. “That’s where you can outsource to this new mode of transportation.”

And that in fact is what the operational plan well into the 2020s is focused on ... as I think is intelligent.  (As I noted, it seems obvious to people who actually know logistics that a 'virtual express company' model that can aggregate key traffic across a widening network of lanes will embrace, not reject, an opportunity to use some modern version of TOFC where that provides operational or financial benefit; it remains to be seen exactly how cost-effective pervasive SAE level 4 automation of large trucks becomes even with -- and this alone shows Lu's savvy in understanding what's important for an operation of this kind -- Penske's distributed maintenance base providing the necessary predictive PM for 'non-stop' capital utilization.)

[ttrraaffiicc]

Overmod

That's not what Cheng Lu says and it's not what the article says

The article says:

Lu envisions Level 4 automation giving rise to a new form of intermodal operations, where trucks piloted by drivers continue to handle short hauls while autonomous trucks emerge as an option for longer-distance freight movements.

It is going to be difficult justifying the use of rail when this is an option.

[Overmod]

ttrraaffiicc

The president of the company envisions a new form of intermodal with autonomous trucks taking the place of trains.

That's not what Cheng Lu says and it's not what the article says; in fact I'd expect an 'autonomous express line' model to save the railroads from themselves by effectively coordinating intermodal access to and from 'bulk moves in te same window of time' that optimize use and maintenance of the autonomous equipment.

I was amused to see him running an ops test with USPS.  Hopefully for him the Post Office has gotten away from its former operating model of outsourcing traffic between regional centers to people providing the absolute lowest cost, often with ancient tractors and crudely repainted older van trailers with the city pairs stenciled on them.  Remembering the effect on another highly overcapitalized and stranded-cost system when the Post Office abruptly redirected its intercity spend on perceived-cheaper alternatives in 1967, I trust Lu isn't making this a cornerstone of autonomous operation unless he can command an effective monopoly of lowest-cost OTR operation (and I suspect he can't without sigificant manipulation of the political system).

Second, it' looks to me as if Lu has never run a restaurant.  A great deal of McLane's traffic is involved not in intercity provisioning between distribution centers, but fairly long delivery of reasonably staged loads to restaurants.  If you thought autonomous container trains were an open invitation to Conrail Boyz - The Sequel, imagine deliveries of what may be expensive food without human on-site presence to watch the loadout.  Now, I don't know either the internal aggregate numbers nor McLane's operational priorities, so they may have enough pure staging moves to contribute materially to his autonomous-express-line model.  But it will lack the flexibility of the present model which can use the same fleet for deliveries as for business-to-distribution-center transfer.

[NorthWest]

https://logisticsviewpoints.com/2018/07/16/no-driver-working-today-will-need-to-change-careers-because-of-autonomous-trucks/

Here's an interesting counterpoint regarding the timeline of autonomous trucking and the state of the industry at the moment.

Last mile deliveries are going to be much harder to automate than highway operation. It suits the traditional model of automation as it eliminates the jobs that people are increasingly unlikely to want (long-haul) while preserving the local jobs that offer far greater quality of life.

My suspicion is that TO and Leader will become increasingly oriented towards machine learning and interfaced with newer generations of PTC and will take over most line-haul rail operations on a similar timeline. Driver costs are a much higher proportion of truck costs than rail costs, but energy costs are also higher.

If railroads can use technology to eliminate many of the service failures and problems that make using the railroads so frustrating for many, then they will continue to succeed accordingly. It's just going to require investment and discipline, which are not at the forefront of present railroad priorities.

[ttrraaffiicc]

Bruce D Gillings

Can highway handle most of what is moving on intermodal now? In time, yes. Hell, it already does in most lanes. Only in a handful of lanes would the loss of rail service overburden the roads. In most lanes, intermodal share is a rounding error. (Okay, that may be an exaggeration, but not too much of one). In the I-5 corridor, if UP stopped running everything (intermodal and carload), truck traffic would increase about 30% north of Roseville. Less so south of there. North of Las Vegas, the complete secession of UP service would increase truck traffic on I-15 and I-70 about 20%. Lane after lane after lane is the same. The Southern Transcon and a few others are the exceptions, not the rules.

Ya, the idea of a "truckpocalypse" that would happen if railroads were to cease operations is just wrong. People don't seem to understand the stranglehold trucking has on land shipping. Nothing even comes close to challenging its dominance. The volume of freight handled by railroads is rather small in the bigger picture.

Bruce D Gillings

But as LCVs are allowed on more bulk loads in more states, and allowable truck weights increase.  Sorry to all who bemoan that, but follow the money…the damage done by trucks to our nation’s infrastructure already is just a precursor of the future.  Governments in a handful of states complain about it, but the Feds and most states just respond with deeper cross sections and stronger bridges, and funding will happen one way or another.  The public is too hypnotized by whoever is being eliminated from AGT or Survivor to have any understanding of complex issues like transportation infrastructure costs. A handful of states will likely fight the heavier bulk LCVs, but most will allow it.  Short- to medium-haul heavy, non-unit train moves will increasingly switch to OTR.

Essentially, if you can't move it in a trainload, you might as well not move it on a train. Of course, intermodal has reached its limits as well and rhere really aren't many prospects for growth as it is just not competitive for a variety of reasons. Railroads are just not cost effective for most shippers anymore. If you actually take the time to look and see how many industries have removed their rail sidings in your area, you would be shocked.

https://www.ttnews.com/articles/tusimple-partners-major-fleets-launch-autonomous-freight-network?utm_source=express&utm_medium=newsletter&utm_campaign=newsletter&mkt_tok=eyJpIjoiWmpGak5EVTVZbUZrTURreSIsInQiOiJMTnVcL1ZkSFVJQWVaQndtVW5CUlowS1dQYTRDTTFMSCtiOEpnbm96bG5YcUpkb1Q2d29zUUhYWWxDbFdIR0o5Vm1cL0FxaFdwR3BPeTV3TVhJTU1FWmlxTDdraXlrTTVaUWY4SHZqOExFTWJ4OGdKRUFZM2F4bkV0c1QzUmdQR2hEIn0%3D

This links to an interesting article about autonomous trucking. It isn't very far off. Likely within 2-3 years. The president of the company envisions a new form of intermodal with autonomous trucks taking the place of trains.

[CMQ_9017]

I'll do a more comprehensive follow up later but I tend to disagree still on some points. What I've been seeing has been the charge towards intermodalism, LTL guys are buying boxes now (Estes, ABF, YRC, ect) and major retailers (Walmart, Amazon) are getting their own in the US following the Canadian Tire success story. I can't think of a more high priority traffic than UPS or FedEx, and yet they ply the rails. Nothing I see as of now indicates that is in jeopardy.

[Bruce D Gillings]

CMQ_9017: my experience over the past several years is that the expectations, needs and demands in supply chains relative to transportation have been changing rapidly from what you’ve described. I say this from working in engineering/construction of DCs and manufacturing/processing plants (mainly food) and what I see and hear from my clients/customers.  I’m not directly working for a railroad, trucking company, or IMC, so I’ll grant that I might a skewed perspective. But with those I deal with, the changes in the past 5 years have been major.  

 

Railroading is a big player for low-value (price-wise) bulk goods (and they have done very well for finished vehicles). For parts, finished goods and consumer goods it’s a different story. Where those are less time sensitive, such as international shipping containers moving inland from ports where the railroad is an extension of a container line, they do well in high-volume, longer lanes.  With time sensitive goods (which is what more and more supply chains demand so that THEY remain competitive), railroading is in trouble. In a handful of lanes they do well: think the Southern Transcon on BNSF and, to a smaller extent, UP’s Sunset Route.  Or Chicago to the New York metro area and the Harrisburg logistics hubs. The list where railroading is a major player is small. And so there are a few lanes where if railroading were to shut down, highway traffic increases would be burdensome.  But, to be clear, it would not be insurmountable or undoable.  In most lanes, railroading either doesn’t offer any service, or its service offerings make it a niche player at best. The impact of the loss of rail service – intermodal or carload – in many lanes would be incidental, easily absorbed by OTR trucking.   

 

My take from what I see and hear from clients, trade publications and at the conferences I attend that focus on the future, is that what railroading is offering in most cases, save the few markets and lanes noted, is not what the logistics world is evolving into. What you’ve described is a shipping model that has less and less value to today’s world, and I think the future.  Hence the declines in non-bulk goods.  It will work for some, but market share will continue falling.  The development of metrics that can measure the intertwined impact of every aspect of the supply chain are about efficiency, velocity, predictability andinformation that was unheard of 5 years ago in general, common industrial applications. But those metrics mean that every cost is measured.  Within that, the value of SIT shipping decreases beyond a limited volume. Yes, it exists, but is shrinking.  

 

Loose-car high-value-goods railroading is gradually declining, losing market share.  Boxcars have become incidental to overall shipping. There are multiple large DCs in the LA Basin that each, on their own, receive more truckloads in a day than both UP and BNSF combined bring in boxcars into the entire Basin, even factoring for the larger cube of a boxcar. Those boxcars have much lower rates than those trucks. But they are disappearing. The COST of using the boxcars to those DCs, whether for a wholesaler, retailer, or 3PL, are greater than the cost of trucking.  Companies are less willing to spend resources managing their shipments with costly contingencies to cover rail failures, less willing to risk losing customers. For more firms, railroading has become more trouble than it’s worth. Low rates are not low costs.

 

For loose-car low-value goods/bulk traffic (which most of it is at this point), rail is doing “okay” in large lanes or volume lanes. But as LCVs are allowed on more bulk loads in more states, and allowable truck weights increase.  Sorry to all who bemoan that, but follow the money…the damage done by trucks to our nation’s infrastructure already is just a precursor of the future.  Governments in a handful of states complain about it, but the Feds and most states just respond with deeper cross sections and stronger bridges, and funding will happen one way or another.  The public is too hypnotized by whoever is being eliminated from AGT or Survivor to have any understanding of complex issues like transportation infrastructure costs. A handful of states will likely fight the heavier bulk LCVs, but most will allow it.  Short- to medium-haul heavy, non-unit train moves will increasingly switch to OTR.

 

I’ll try to follow up with comments on intermodal later. Suffice it to say for now that unless the industry and its players figures out a way to profitably replicate the basic Interstate Highway network for coverage, and do so reliably based on what supply chains want, intermodal has probably reached its zenith. I wish it would be different, but I don’t see that it will.

 

[CMQ_9017]

Allow me a friendly rebut if you will --

 

Lets talk load utilization. And I can only speak to my experiences, mostly shipping a high density commoditized good that doesn’t have any utilization issues (IE I weigh out before I cube out every load). My reference of a 1 railcar to 4-5 truckloads holds true, I can load a C plate to 156Klbs and an F Plate to 209Klbs, whereas I load van-trucks to 45 to 46K going over US federally subsidized highways and outside of established state coalition zones. I’ll load ‘cans’ up to 43,500lb without legal weight issues. The utilization of the box vs van is really not a huge issue and doesn’t drive the needle cost wise. A load for me however isn’t a load for the Walmarts or Amazon’s of the world. Retail goods have a lot of air and dead space in that packaging (styrofoam), so they typically cube out before they weigh out (or get to some equilibrium that is close). Also, its foolish to think every box has perfect load utilization, you wouldn’t believe how many trucks or boxes are out there that are empty (we'd call it a repo move, meanign reposition to a different market area with better freight prospects) or loaded with 10K, 20K and only half or partially cubed. Some companies don’t care, they just need to ship something and they don’t like the LTL networks. Actually intermodal is a good fit for some of these, better price point and the service is good (compared to even 10-15 years ago). We used to repo 5-10% of our boxes out of the East coast markets to Chicago/Midwest daily because they were high consumer markets and produced less than they consumed. The rail gave us a break to move empties and it saves you having a driver wonder around miles and miles looking for a load. If you couldn't sell the capacity on the spot market, get that box back to somewhere it's useful (you touched upon asset utilization imagine that and we did it most everyday).

 

You’ve dialed over from load utilization to asset utilization. Again, your assumption relies on the idea that a truck driver drives 1000 miles, drops off a load either D&H or live unload, and grabs a load within 1 mile of his drop and returns exactly to his point of origin. The freight markets don’t work that way… and again, drivers aren’t perfectly utilized on their assignments (oh your van was rejected and the nearest empty is 200 miles away?). I’m not saying rail is perfect either, but the terminal model with intermodal makes things simpler -- everyday you start and stop at the same place. Flat tire? Broke down tractor? It’s easy to recover the load when you have more assets working a marketplace. I think comparing asset utilization of a railcar vs a truck is really a poor idea, thats apples and oranges. Rail is a conveyor belt, you plan on recieving x amount of cars a day. Also I forgot to mention, if you are a shipper the most important thing with railcars are not sending out the loads, but taking the inbound empties. Here’s another advantage of mixed modes in the supply chain you probably didn’t think of (I didn’t think of it until just this second since my warehouse days are long over)-- labor management. Remember, before a load can leave a warehouse, it needs to be built in a system and that translates to the floor. You plan on loading 100 trucks a day at 40 pieces each, that means you have 4000 pieces in your warehouse you need to find, stage and move efficiently… each...day. You fall behind? Tomorrow will be worse. What’s that I see outside? Oh its a truck line, D&D starting to rack up, drivers on the clock, turning around, VNU charges…. Yeah been there. Railcars offer labor flexibility, lets say you have 20 rail spots and a switch every 2 days. You can load those on your own time and it eases the burden of having to manage more smaller loads with each truck having its own unique issue. D&H loads offer some more relief there, but thats not perfect either (and requires a yard service)

 

The other thing I think you’ve overlooked is the value of each mode working together in the entire supply chain . A widget factory reached production efficiency when it can make 100,000 of widget ‘A’ all on a single run, but is there market demand at that time for all those? No. Maybe the order book over the next 2-3 months will cover that demand, but we have to get product off the floor so we rely on the slower, cheaper modes and put product through an intermediary RDC or warehouse, whereas we can truck/intermodal some loads that are more urgently needed. That’s the value of the supply chain (end to end), maintain efficiency in your core operations. Remember for shippers, 99% of them logistics is not their core function, it’s making or consuming stuff. They really sometimes are so focused on that they realize they are within one day of shutting down a production line because they are out of physical space in their warehouse. I’ve loaded boxcars, stuff ‘em in the yard and called it a ‘warehouse’ to my boss. SIT cars come in handy too, especially if you have a good shortline partner who is happy to plug ‘em somewhere (the PSR fad does not look keenly on SIT cars).

 

If you look at the FHA data, the highways could certainly not handle all the tons of volume handled by the rails. How long does it take to add an additional lane to a highway that is 100 miles? We’ve all suffered through the chaos of additional lane construction that seems never ending. Capacity can’t come out of thin air. 

 

I'd be curious to know where you get the 2-1 factor for railcars? Again, we go by weights in boxcars, hoppers, ect. Remember we pay per load per mile in trucking, so a truck 1000 miles costs $1000 whether you put one pallet on it or 40. A railcar is billed in weight classes and miles, so <140K is one weight class, 140-170, may be one, 170-200 another and 200K+ its own price per mile. Autoracks our outside of my purview, so I won’t pretend to know anything about that. Tank cars are interesting, some chemicals in transit separate or ‘lose suspension’ or encounter a physical property change. So rail on some of those can be problematic if you encounter issues along the way. 

 

A lot of the raw materials like that are on auto-reorder points and inventory management programs where a company’s inventory of raw material (lets say Latex) is monitored or mapped remotely by the vendor/merchant/supplier, and they establish a threshold to say, when you reach 30% of your inventory we send you another tank car of Latex, which takes 20 days to reach you (and in 20 days you’ll be down to 15%). The customer tries it, tweaks it, then agrees and eventually it's not something they end up really managing, but rather its something they expect. One of the supply chain managers I worked for early on in life told me that when something just shows up when you need it and you don’t have to think about it, everything is going right. A lot of the ‘Hey Frank do we need to buy more raw materials’ days are over, the inventory management models are created to ensure supply never runs out, and usually only during an exceptional period or a supply shock are there problems (I feel like every year up north LPG is always a problem in Q1/Q4 like everyone forgets winters are cold)

 

The loss of market share has mostly been coal but largely PSR…. let’s not ignore that for a second. You had to drag the STB into the CSX implementation, things got ugly really fast there. But I disagree on the failing to understand their customers. In fact, I think they are understanding our needs more and more. They come in and discuss with us all the things they are doing to become more of a ‘one-stop’ solution. They're getting better in their systems, and the blend of intermodal capability into their service mix to offer a truck like solution is getting better all the time. In fact, they wouldn't offer intermodal at all if they didn't care about capturing the volume (remember the retail vs wholesale model of intermodal too) Again, withstanding COVID, I’d say the PSR movement has really been the issue with market share, and a lot of that is driven from the top trying to boost that almighty market cap. A lot of the ops and sales people are really trying to make it customer centric, but the rug in a lot of cases has been pulled from beneath them. Railroads as a ‘niche’ supply chain option is akin to saying that SUVs are going to become a ‘niche’ in the vehicle market (and there are a lot of people that say that time to time) in the future.

[NorthWest]

Bruce D Gillings

The world is changing. It is less and less about rates on commodities of any value other than the low-end bulk moves and a small number of non-bulk moves. It is about supply chain costs. And that is where railroads are getting skunked, and badly. And the shift to controlling supply chain costs is accelerating. Unpredictable/unreliable service translates to higher costs in warehousing, labor, inventory, and the loss of customer satisfaction. The evolving ability to analyze the cost impacts is not boding well for railroading. The railroad attitude of “my way or the highway” more and more means the highway. Lower rates do not equal lower costs. And poor service makes the risk of alienating YOUR customers because you couldn’t deliver on time because the railroad switched to PSR and ran trains too long for sidings/yards that died on the law; and had maintenance windows that made an already-late Z train later by 6 more hours; and all the other reasons.

Railroading is losing market share. Not just because of the loss of coal, or trade wars, or Covid. But because they are failing to understand their customers. Their financial focus is on their own costs, not the costs/impacts to their customers. If that doesn’t change – soon – then freight railroading will become a niche operation in a limited number of heavy haul lanes.

+1.

 

Bruce, great post.

[BaltACD]

Backshop

 

BaltACD 

Backshop

Besides longer containers/trailers grossing out before cubing out, there's also the matter of manuveurbility while on the road.

I would feature a single 60 is more manuverable than the doubles and triples that I have seen on the roads. 

Yes, but doubles and triples can be broken apart when going into urban areas.  A 60ft stays a 60ft.  Turns are an adventure.

Isn't that what Distribution Centers have been developed to serve - Mass quantities to the DC, store sized quantities from the DC to the stores.

A single 60 vs. double 27's.  While the 27's can handle more gross, they also present more tare - loaded or empty.

[Backshop]

BaltACD

 

 

Backshop

Besides longer containers/trailers grossing out before cubing out, there's also the matter of manuveurbility while on the road.

 

 

I would feature a single 60 is more manuverable than the doubles and triples that I have seen on the roads.

 

Yes, but doubles and triples can be broken apart when going into urban areas.  A 60ft stays a 60ft.  Turns are an adventure.

[BaltACD]

Backshop

Besides longer containers/trailers grossing out before cubing out, there's also the matter of manuveurbility while on the road.

I would feature a single 60 is more manuverable than the doubles and triples that I have seen on the roads.

[Backshop]

Besides longer containers/trailers grossing out before cubing out, there's also the matter of manuveurbility while on the road.

[wasd]

BaltACD

The question in my mind is why did the industry didn't (and hasn't) gone to 60 footers?

In some limited areas, it has. CN and CP move a small fleet of 60ft containers for Canadian Tire. I have seen these myself on one occasion. They are only allowed on certain certified road routes and must ride on the top of a stack.

[Overmod]

BaltACD

The question in my mind is why did the industry didn't (and hasn't) gone to 60 footers?

As I understand it, the situation is very like locomotives going from 4400 to 6000hp as they next big thing'.

A 53' box is already a kludge, no longer on a common ship 'module'; it specifically represents a 'Western' van trailer length.  While it is possible that the length could be extended, 53' is already way too long to go many, many places, and loading it to 'capacity' leaves you concerned with weighing out at the cubage that would have fit in a compatible 48' -- remembering that you have to balance and dun the load both longitudinally and transversely.

As happens, there has been an experiment with 60' containers, in captive traffic that suited the increased cubage.  That was for Canadian Tire, and I suspect someone like greyhounds can tell the story better than I could.

Meanwhile, check how the permitted combination weight increases as you get from 48' up with full intermodal box strength.  The economics of the RailRunner were badly under water with 48' units ... now consider the same axle-weight limits, and no amount of lobbying will get those increased with so much damage from trucks already publically obvious, and then consider the vise between having to fill the whole 60' length with goods that don't weigh out prematurely.  Even if you have, or can tie into, an effective freight forwarding agency or 'express' line for efficient LTL, there's a lot of empty space for your full-price perilously-long can.

Now, it might have been interesting if LASH had caught on to see whether lightering could make something of a 60' module loaded to non-road weight, drayed only to terminals, and loaded to facilitate rapid (and as automated as possible) transfer to right sized trucks (or to stuff that worked with existing well cars).

[BaltACD]

One thing that puzzles me about containerization and how it has grown from the original 20 foot box - from container ships being measured in TEU's (20 foot equivalent units).  Growth from 20 foot to 40 foot was a no brainer.  But the next lengths brought to the market were 48 foot and then 53 foot.  The question in my mind is why did the industry didn't (and hasn't) gone to 60 footers?

I know there are a number of restrictions on truckers in the US on length and I suspect there are also restrictions throughout the rest of the world.  But, the container industry is BIG business all around the world - big business has big money and big money gets the laws it wants.

[Bruce D Gillings]

Always good to read perspectives from insiders like CMQ 9017.  But, allow me to throw out a few contrarian thoughts. 

 

First, rail freight overall does not equate to 4 or 5 trucks per railcar. On intermodal it is not even 1-to-1 (more on that in a moment).  On stack trains, when factoring for length of wheels, couplers, etc, you get about 1.6 times (NOT 2 times) the boxes as a spine car per length of car. That said, you don’t get any more in a box on rail than on the road. And, for containers, the tare weight of the can and the chassis means you weigh out first on intermodal than OTR. So on intermodal vs. OTR, OTR can carry more load. Cube is very close. 

 

On non-intermodal, bulk cars (ie: hoppers of various commodities) you will get between 3 times and 4 times what you get OTR in volume/tonnage. But OTR will get a lot more round trips than rail in any time frame measured. It varies from 3 or 4 times as much to up to 8 times as much. So the INVESTED capital in the truck is far more efficient than railcars.

 

For other railcars (boxcars, many other cars such as non-lumber flats, auto carriers, etc) the average ratio between a railcar and truck is closer to about 2-to-1. Factor in the greater number of turn-arounds on OTR, and rail loses its advantage.

 

Where rail excels – a lot – is in line-haul costs. And thus the longer hauls mean great savings in rates.  But for intermodal, long drays added to terminal costs bring that advantage down – a lot – on longer hauls, and get close to equalizing it around 500 miles or so, and below that OTR wins the door-to-door rate war.  For carload, if you are lucky enough to have sidings on both ends, rates are almost always better by rail.  But that is not the overall cost of transporation (more in a moment). 

 

OTR goes everywhere.  Everywhere. If you don’t have a siding and want carload, then you have transload costs. And if your shipment needs interchange, you’re getting into challenging territory.  And look at intermodal service lanes.  Want to ship intermodal from Seattle to Salt Lake City? Nope. Denver to Phoenix? Nope. Jacksonville to Denver? Nope. There are limited lanes in the intermodal network, and so you have to choose where and decide if there are enough lanes to justify the time and energy to deal with the railroads.

 

Can highway handle most of what is moving on intermodal now? In time, yes. Hell, it already does in most lanes. Only in a handful of lanes would the loss of rail service overburden the roads. In most lanes, intermodal share is a rounding error.  (Okay, that may be an exaggeration, but not too much of one).  In the I-5 corridor, if UP stopped running everything (intermodal and carload), truck traffic would increase about 30% north of Roseville. Less so south of there. North of Las Vegas, the complete secession of UP service would increase truck traffic on I-15 and I-70 about 20%.  Lane after lane after lane is the same. The Southern Transcon and a few others are the exceptions, not the rules.

 

The world is changing.  It is less and less about rates on commodities of any value other than the low-end bulk moves and a small number of non-bulk moves. It is about supply chain costs.  And that is where railroads are getting skunked, and badly. And the shift to controlling supply chain costs is accelerating. Unpredictable/unreliable service translates to higher costs in warehousing, labor, inventory, and the loss of customer satisfaction. The evolving ability to analyze the cost impacts is not boding well for railroading. The railroad attitude of “my way or the highway” more and more means the highway. Lower rates do not equal lower costs.  And poor service makes the risk of alienating YOUR customers because you couldn’t deliver on time because the railroad switched to PSR and ran trains too long for sidings/yards that died on the law; and had maintenance windows that made an already-late Z train later by 6 more hours; and all the other reasons. 

 

Railroading is losing market share.  Not just because of the loss of coal, or trade wars, or Covid. But because they are failing to understand their customers. Their financial focus is on their own costs, not the costs/impacts to their customers.  If that doesn’t change – soon – then freight railroading will become a niche operation in a limited number of heavy haul lanes.  

[daveklepper]

Thanks, CMO.  And you are now "on the other side of the desk!!"

[BaltACD]

Electroliner 1935

Just a little side track about trucking. I have lately be watching a number of YOUTUBE video's of MIDWEST TRUCKING. These are of a high strength tow truck operation that handles semitrailer accidents. Man is a pro at his job. But when you see the damage that can be done to a truck, and the time and effort to clean it up, (much smaller than a RR crash) I wonder how that factors in the business case for trucking. 

Ron Pratt of Midwest Truck out os Scott City, MO

[Electroliner 1935]

Just a little side track about trucking. I have lately be watching a number of YOUTUBE video's of MIDWEST TRUCKING. These are of a high strength tow truck operation that handles semitrailer accidents. Man is a pro at his job. But when you see the damage that can be done to a truck, and the time and effort to clean it up, (much smaller than a RR crash) I wonder how that factors in the business case for trucking.

[Murphy Siding]

Thank you. That was educational.